SBI Magnum Equity Fund Presentation


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SBI Magnum Equity Fund Presentation April 2011

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SBI Magnum Equity Fund Presentation

  1. 1. Flow of the presentation Large Cap Portfolio Sector Story Performance and Risk Analytics Fund Details Synopsis
  2. 2. Creation of Efficient Portfolio CAGR , since Jan 2005 Volatility, since Jan 2005 20.56% 35.06% 33.91% 32.79% % CAGR Return 25.00% 18.42% 16.76% 40.00% 20.00% 15.00% 30.00% 10.00% 20.00% 5.00% 10.00% 0.00% 0.00% Sensex Midcap Small Cap Sensex Midcap Small Cap BSE Sensex has outperformed BSE midcap and BSE small cap Daily volatility over long term of BSE Sensex, BSE Midcap index in last 5 years and BSE small cap is very Similar • BSE Sensex, BSE Midcap and BSE Small cap show very similar characteristics over a long period. • Risk, Returns imply that investments over a long periods are capitalization agnostic. • But long term trends results are derived on various short term trends.Source: Bloomberg. Data as on 31.12.2010
  3. 3. Creation of Efficient Portfolio Performance Growth of INR 100 80.00% 140 120 Value in INR 60.00% CAGR returns % 100 80 40.00% 60 40 20.00% 20 0 Oct 08 May 08 Aug 08 Nov 08 Jul 08 Apr 08 Jan 08 Feb 08 Mar 08 Jun 08 Jan 09 Feb 09 Dec 07 Sep 08 Dec 08 0.00% 1 Year 2 Year 3 Year 5 Year -20.00% Sensex Midcap Small Cap BSE MID CAP BSE SMALL CAP BSE Sensex The returns of BSE Sensex, BSE Midcap and BSE Small cap are In a downward trending market, large caps outperform divergent in shorter time horizons. midcaps and small caps 375 Sustained Bull run 350Growth of INR 100 325 300 275 250 225 200 175 150 125 100 75 50 Sensex Midcap Smallcap Source: Bloomberg. Data as on 31.12.2010 In a sustained bull run in, midcaps and small caps outperform large caps
  5. 5. Top Down Approach for stock bets Economic Qualitative Liquidity Interest Rates Regulation Growth Factors Flows Macro Outlook Demand- Business Profitability Pricing Supply Cycle Sector Allocation Business Mgmt Valuations Model Stock Selection
  6. 6. Focus Themes Consumer Discretionary Healthcare IT
  7. 7. Sector Picks: Consumer Discretionary 150 140 Index price movement 130 120 110 100 90 80 70 60 50 BSE 100 BSE FMCGConsumption sector to reap benefits: Resilient domestic economy and negative real interest rates continue to boost consumer spending. Rural upliftment  Rural Income not completely dependent on agriculture  Dependence on Monsoon is reducing as the proportion of irrigated land increases and ‘NREGA’ “Inclusive growth” government policies  Developmental policies by UPA government has led to Wealth effect play in rural India. example: Rural penetration of Car, Two wheelers  Government has spent US$26bn on key rural programmes in last four years, which is ~11% of total government spending in the same period Source: Bloomberg. Data as on 31.12.10
  8. 8. Healthcare 160 150Index Price Movement 140 130 120 110 100 90 80 70 60 50 BSE 100 BSE Healthcare  With multiple growth drivers (US, emerging markets, domestic demand) playing out simultaneously, it is expected that earnings trajectory would be strong & return ratios robust.  Cost advantage and quality acceptance is opening up a number of markets across the globe. Most Indian firms are better placed (in terms of size, visibility, readiness of plants & filings) to target this wave than in the past, due to increase investments  Risk return trade off is favourable on the back of better visibility and the inherent defensive nature of the business Source: Bloomberg. Data as on 31.12.10
  9. 9. Information Technology 150 140Index Price Movement 130 120 110 100 90 80 70 60 50 BSE 100 BSE IT  Recovery in tech spending in US  Expectation of weak INR relative to USD  Increasing market share of Tier I Indian vendors  Relatively Higher predictability of growth Source: Bloomberg. Data as on 31.12.10
  10. 10. In a Nut Shell: Magnum Equity Portfolio • Less Volatile • Highly Liquid Stocks • Top Down Strategy • Better risk adjusted returns Large Cap Portfolio features
  12. 12. Performance Analysis CAGR Return 30.00% 24.54% 25.00% 20.23% 20.00% 15.57% 15.28% 15.00% 9.73% 9.43% 10.00% 6.87% 5.00% 3.64% 0.00% 1 year 3 years 5 years Since Inception Fund Benchmark The Fund has outperformed the benchmark in 1 Yr, 3 Yr, 5 Yr and since inception bases. Past performance may or may not be sustained in future. Returns are CAGR and for dividend option. It is assumed that dividend declared under the scheme has been reinvested at the prevailing NAV. Growth option was introduced on 27th November 2006. NAV (Growth ) as on 30/04/2011 is Rs. 43.97. Source: MFI Explorer. Data as on 30/04/2011
  13. 13. Risk Analysis Quantitative Data Standard Deviation* 32.70 Beta* 0.95 R-Squared* 0.96 Sharpe Ratio* 0.13 Portfolio Turnover 1.95 Total Expense Ratio 2.29•1Year Data, as on Apr 30, 2011. Source: Crisil Fund Analyser
  14. 14. Synopsis Pure large cap fund Relatively aggressive in terms of stock concentration and active stock weights vis-à-vis the benchmark Top down strategy toward large caps which comprise 96 % of the portfolio Presently, over-weight services, pharma and consumer goods Portfolio has outperformed benchmark in 1 year, 3 year, 5 year and since inception basis
  15. 15. Fund Details
  16. 16. Fund DetailsInvestment Universe: 2937 listed stocks on BSE (traded regularly)Investment Style: GrowthInvestment Approach: Top down approachBenchmark: CNX NiftyInception Date: Jan 01, 1991Load Structure: For exit within 1 Year from date of allotment- 1% For exit after 1 Year from date of allotment- Nil
  17. 17. Fund Details Normal Asset Allocation Style Box Type of Instrument (% of Net Assets) Risk Profile Equity and related instruments Not less than 70% Medium to High Debt instruments Not more than Low to medium 30% Securitized debt Not more than Medium to High 10% of the investment in debt instruments Money Market Instruments Balance Low
  18. 18. Investment Management Process Stock Universe Quant Screening Fundamental analysis Investment Universe Fund Risk Controls Mandate Portfolio
  19. 19. Fund Details Asset Allocation Sector Exposure 0 4 6.05 8.89 6.50 2.55 6.54 10.29 3.01 10.06 13.54 3.87 96 Automobiles 24.40 Construction Consumer Goods Energy Financial Services Industrial Manufacturing IT Media & Entertainment Metals Large Cap Midcap Other Current Assets Pharma TelecomA pure large cap fund, which provides high Overweight services, pharma and consumer goodsliquidity, low volatility and beta PlayData as on 30.04.2011
  20. 20. Funds Details Top 10 Holdings Dividend HistoryStocks % of NAV LAST DIVIDENDS :HDFC BANK LIMITED 7.53%STATE BANK OF INDIA 7.04% Record Date Dividend (in Rs./Unit)BHARTI AIRTEL LTD (PREV.BHARTI TELE-VENTURES LIMITED) 6.05%RELIANCE INDUSTRIES LIMITED 6.05% 28-Jan-2011 3.50ICICI BANK LTD 5.84%INFOSYS TECHNOLOGIES LIMITED 5.10% 31-Dec-09 5.00ITC LIMITED 4.81%COAL INDIA LIMITED 3.21% 07-Nov-07 5.00BOSCH LIMITED ( PREV. MOTOR INDUSTRIES COMPANYLIMITED) 3.18% 03-Oct-06 5.00SUN TV NETWORK LTD ( PREVIOUSLY SUN TV LIMITED ) 3.01% Top 10 stocks constitute 51.82 % of the portfolio Data as on 30.04.2011
  21. 21. Expertise Managing the Fund • Mr. Navneet Munot Mr. Navneet Munot joined SBI Funds Management Pvt. Ltd. as Chief Investment Officer in Dec. 2008. Most recently he was the Head of Multi Strategies fund at Morgan Stanley Investment Management. Prior to joining Morgan Stanley Investment Management, he worked as the Chief Investment Officer (Fixed Income and Hybrid Funds) of Birla Sun Life Asset Management Company Ltd. Several funds managed by Navneet got recognition for their consistent superior risk-adjusted performance and won several awards from independent agencies such as CRISIL, CNBC TV 18, ICRA, Reuters Lipper and got top ranking in Value Research. Navneet has been associated with the financial services business of the Birla group for over 13 years and worked in various areas such as fixed income, equities and foreign exchange. His articles on matters related to financial markets have widely been published. Navneet holds a Masters in Commerce and is also a rank holder Chartered Accountant. He is a charter holder of Chartered Financial Analyst Institute, US and Chartered Alternative Analyst Institute, US. He has also done Financial Risk Management, FRM from Global Association of Risk Professionals (GARP). • Mr. R. Srinivasan Mr. R Srinivasan is the fund manager of the scheme. He started his career in 1992 with Capital Market Publications and subsequently worked on the Sell side with Indosuez WI Carr, Motilal Oswal Securities and Sunidhi Consultancy. He moved to the Buy side with Oppenheimer & Co (now Blackstone) and later joined Principal PNB Mutual Fund. Prior to joining SBIMF he was with Future Capital Holdings. He has completed his post graduation in Commerce and holds a Financial Management degree from the Mumbai University
  22. 22. DisclaimerRisk Factors: Mutual Funds and Securities Investments are subject to market risks and there is no assurance or guarantee that theschemes objectives will be achieved. As with any other investment in securities, the NAV of the Magnums/Units issued under thescheme(s) may go up or down depending upon the various factors and forces affecting the securities market. Past performance of theSponsor/AMC/Mutual Fund/Scheme(s) and their affiliates do not indicate the future performance of the Scheme(s) of the Mutual Fund.Investment Objective: Magnum Equity Fund (An open – ended equity scheme) - To provide the investor long term capital appreciation byinvesting in high growth companies along with the liquidity of an open-ended scheme through investments primarily in equities and thebalance in debt and money market instruments. Magnum Equity Fund is only the name of the schemes and does not in any mannerindicate the quality of the scheme, its future prospects and returns. Statutory details: SBI Mutual Fund has been set up as a trust underthe Indian Trusts Act, 1882. State Bank of India (SBI), the sponsor is not responsible or liable for any loss resulting from the operation ofthe schemes beyond the initial contribution made by it of an amount of Rs. 5 lakhs towards setting up of the mutual fund. AssetManagement Company: SBI Funds Management Private Limited (A joint venture between SBI and Société Générale Asset Management).Trustee Company: SBI Mutual Fund Trustee Company Pvt. Ltd. Please read the Scheme Information Document carefully before investing.